In the 1970s, the Fair Isaac Corporation created the first credit scoring system, dubbed the FICO score. This has since been standardized as the industry's leading credit score model to assess potential borrowers. More recently, the VantageScore was created in collaboration with the three major credit bureaus (TransUnion, Equifax and Experian) as a new generic proprietary credit score model marketed as a more "consistent interpretation" and "accurate score" than FICO. As Credit Karma provides you with your VantageScore for free, here's what you need to know about it. Note that these details are based on the VantageScore 2.0 model.

What is VantageScore 2.0?

In the 1970s, the Fair Isaac Corporation created the first credit scoring system, dubbed the FICO score. This has since been standardized as the industry's leading credit score model to assess potential borrowers. More recently, the VantageScore was created in collaboration with the three major credit bureaus (TransUnion, Equifax and Experian) as a new generic proprietary credit score model marketed as a more "consistent interpretation" and "accurate score" than FICO. As Credit Karma provides you with your VantageScore for free, here's what you need to know about it. Note that these details are based on the VantageScore 2.0 model.

Credit Scores Vary

First of all, it's important to keep in mind that you do not have one "true" credit score. There are actually over 100 different credit scoring models used in the industry that varies by bureau, reporting agency, model type and lender. Each model uses a different algorithm that weighs each part of your credit report differently, which explains why you may have a 750 from Credit Karma and a 762 from FICO. We've previously addressed how to understand the credit score differences; there are indeed many different credit score models, but they are all highly correlated. They use different ranges, different formulas, and the information found on your credit report can differ from bureau to bureau, but all the models aim to assess your credit history and translate it into your 3-digit credit score number.

The VantageScore

The three major credit bureaus offer their own proprietary models but usually provide the FICO score to lenders. The VantageScore was created as a consistent credit score model across the three bureaus to compete with the FICO score and offer lenders a more standardized score.

The VantageScore is being touted as "The New Standard in Credit Scoring," and it can potentially become big if the bureaus can compete successfully with the stranglehold FICO has on lenders. It just depends on whether lenders will be willing to change to a different model.

The VantageScore offers additional features that the FICO model doesn't incorporate, such as predictive scoring and a 24-month review of credit history. Here are some of the main differences between the two competitors:

Thin file consumers often cannot generate a credit score at all, or are scored with inflated, high scores because they have few credit actions on file

Bottom Line

The VantageScore's particular credit scoring method is especially good news for consumers with thin files and consumers who may have prior negative actions against them but have a good recent history.

Again, please keep in mind that the VantageScore is one of dozens of models in use, and your VantageScore will still vary between the three credit bureaus. While they use the same scoring model, the information on your credit report may differ from bureau to bureau.

What is most important is that you monitor and manage your credit health by checking your credit score every few weeks. Keeping track of your credit score over time, not just once or twice, will give you the most valuable insights into how to adjust your credit habits to build towards a healthy score.

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All Comments

I see a lot of misconceptions in these comments. Just wanted to share a few things I've learned about the credit game after being pretty stupid about it in my twenties. As far as the scores themselves go, people need to understand that these fluctuate routinely and there are dozens and dozens of different models out there used by lenders. There's FICO, FAKO, Vantage, and many, many others. They all use different algorythyms which result in different scores. The credit score websites are the same way and can give you a different score for the same bureau as well between different sites depending on which model they are using. This site gives you a good glance at your FICO and vantage score and a good baseline to judge where you're at and that's all. If you are going to be applying for a mortgage or another major purchase, they'll pull the scores they will use (usually a version of FICO) and disclose them to you as part of the application process. If you want to check them in advance, you can go to myfico.com and order them, but they're around 20 bucks for each bureau, so you probably only want to do this if you are looking at a major purchase. If not and you just want to monitor your transunion, this site is great (and best of all, it's free). You can use credit sesame to monitor your experian score for free as well. I am not aware of a free site for Equifax as of yet. In this day and age of identity theft, I would also recommend paying for an identity monitoring service as well. I use Identity Guard and pay 15 bucks a month (got a discounted rate for singing up through next advosor). For this I get active monitoring that lets me know if anyone ever tries to apply for a loan or credit card in my name and all three FICO scores updated quarterly. It's worth it to me for the peace of mind knowing that if an identity thief does somehow get a hold of my information and tries to start opening accounts I can cut if off immediately before the damage mushrooms. Use this site and credit sesame to keep an eye on your transunion and experian scores for free and pay for an identity monitoring service each month if you can squeeze the extra 15 or 20 bucks a month in and you'll build a very good active picture of your credit and how it changes over time.

In regards to rebuilding credit (the stage I am currently in) and using credit in your favor, start with credit cards if you're in the hole. You might have to get a secured one if your score is really, really bad (I didn't have to do this, but some people have no choice). Start with one and build from there. Use the card for 6 months to establish a baseline good credit history that shows you are paying on time. As your score moves up, you'll qualify for non-secured cards. You'll have to start with the cards that have an annual fee, however most of these still have a 12 to 15 month 0% APR introductory period. Use that period to make purchases each month of around a hundred bucks or less. Whatever keeps you under 20% of your total available balance (this puts you in the excellent range of your credit utilization ratio, which will increase your score the quickest). Once the APR period runs out, only make one or two small purchases each month and then pay the balance off in full each month. You need to do this because most credit card companies will mark a card as inactive and stop reporting it to the bureaus if you don't use it for a certain period of time. Once you move your score up enough to qualify for the no annual fee cards, you can either keep these accounts open if you don't mind the annual fee, or close them all together. If you do decide to close them, make sure you don't do it before you have opened at least the same amount of accounts with no annual fees. Remember, the amount of active and paying on time accounts on your credit report is a major factor in your score, so you want to keep this in mind when balancing the merits of closing the account and eliminating the annual fee versus removing an account with a good paying history from your report. Once your score is in the good/excellant range you can cancel these secured/annual fee cards with no hesitation just as long as you have at least a couple of other credit cards with no annual fee in good standing still open after you cancel them.

Once your score moves up enough to qualify you for the no annual fee rewards cards, you can start using the credit game in your favor. I like the cashback cards like Chase Freedom and Capital One Quicksilver. These types of cards give you a free hundred bucks if you spend a certain amount within the first few months. I get gas and groceries on the card for the first few months in order to hit the qualifying amount and just pay the balance with the money I would have used for the same thing out of my paycheck. Once I get the free sign up cash, I dial it back and keep it under that magical 20% or less of the balance each month while getting cash back on everything I buy. A lot of these cards have special categories that rotate on a quarterly or annual basis where you can get as high as 5% cash back on anything you buy. There are cards in all sorts of other areas of interest. I like the NFL card that gives me 20% off of everything I buy at NFL.com amongst other things. Once you reach the stage where can can qualify for these types of cards, you can earn all sorts of benefits from discounts to cash back that are beneficial to you and really make the annoying credit game work in your favor.

A few other tips...

Don't get discouraged. Even if your score is so low that you only can qualify for a secured card, you CAN get your score up to the exellent range and not have to spend a lifetime getting there. You just have to be disciplined and follow a plan.

Stay away from the debt consolidation companies. A lot of these companies do more damage to your credit than they do help. If you are delinquent, negotiate with the company you are dleinquent with directly. Most of the time you can pay off your debt by only paying 25% to 50% of what you owe. Once you are delinquent enough they pull your debt off of their ledgers as a tax write off and after that point they'll be happy to take whatever additional amount they can get back (within reason) because they already wiped you off the books as an asset. Always negotiote directly with your debtor if possible and avoid collection agencies and credit consoldication companies. If a debt collector is harrassing you and you are finally in a position to pay the debt, ignore them and go straight to the company you have the debt with if at all possible. If you do have to deal with the debt collector, make sure they have the delinquent account erased from your report once you have paid it in full and not just reported as paid. They will tell you they cannot do this, but that is quite frankly bull. Make sure you negotiate this and get it in writing before handing over payment because they do frequently lie and tell you they will do something that they have no intention of doing once they have your payment. If you can't pay the debt, you do have the right to instruct them to stop calling you. If they are threatening you with legal action, this is often illegal and you can force them to stop. Research your rights. Google search consumer credit protection rights and go from there. Arm yourself with knowledge. Even if you're in a horrible financial position and have multiple delinquencies, you still have rights and can dig yourself out. Make sure you know what they are and don't let the debt collection and credit consolidation vultures prey on you.

Be careful with balance transfer cards. A lot of people use them to try to consolidate debt on high interest cards, but most of them have fees attached. Usually around 3 to 5 percent of the balance you are transfering and most of them hit you with an interest charge on the full amount if you don't pay it off in a cretain amount of time. They can work in certain situations, but only use these as a last resort and make sure you read the fine print and know all of the possible penalties and interest charges before taking the plunge.

Never get a cash advance with your credit card. The fees are absolutely ridiculous and you are completely screwing yourself anytime you do this.

Be wary of store cards as well. Only use them if you really are going to be spending a lot of money at that store and doing it for many years into the future. Some of them can be very beneficial if you really do spend a lot and do it frequently at the store, but quite a few of them do not have the benefits to make it worth the interest and other fees they charge unless you really are spending in large amounts and doing it frequently. There are some good ones out there though, not all are bad. Just always make sure you read the fine print and know all of the fees and charges before signing up for one (or any other credit card for that matter).

Always keep your cards under 20% of the total balance each month. You can go as high as 40% in a crunch and it won't hurt you too bad. Even up to 60% won't damage you too harshly (but it will sting), but anything over 60% of the total balance will steadily bump your scores back down. Credit utilization ratio is very, very important. Once you've dug yourself out of the hole and are amongst the good graces of the good/excellant range, STAY DISCLIPLINED. As long as you keep those accounts paid on time and under 20% each month, you'll always be in good graces and will qaulify for the best car, mortgage, and cash loan interest percentages and terms that are out there and will save yourself thousands and thousand of dollars when making major purchases like a car or a home. For a mortage good credit can mean the difference of staggering amounts of money over the course of a thirty year mortgage.

It can seem almost impossible to dig out, but you can do it. Start small, build the amount of accounts that are active and are being paid on time each month, and stay disclined with your spending. ALWAYS pay your bills on time. If you do this your score will climb steadiy over time and you WILL get to the point where it's back in good/excellant standing. Once you're finally there, stay within you limits, use the cash back and or other rewards and bonuses to your advantage, and use the credit game to your advantage intead of theirs.

This advice is right on the money,just one thing to add , when making small purchases and paying them off every month people get discouraged when thay don't see their score go up and they're paying off the balance on or before the due date,that's because the bank has a different reporting date to the credit agencies..So if they report on the 13th but your paying the balance on the 20th,they'll always be reporting you with a balance,so call the bank and find out their reporting date..

I disagree about the statements made by commentors that it takes a long time to build credit. Ten years ago I was totally disabled from a complete neurological virus. My credit was excellent before I shut down with illness, and then totally wiped out as the illness continued.

I went to a local credit union, after being totally disabled and unable to work. My only income was some savings and a disability check each month. I was "totally upfront" about my illness, and simply stated I wanted to rebuild my life. I started with a $1000. loan repayable in 18 monthly payments. I paid the loan off in nine months. Then, I asked for a car loan. I used my van to get an $1800 loan repayable in three years. I paid off the loan in 13 months. I also had saved one half of my disability checks by purchasing nothing for four years. I was sick, bedridden, and didn't waste my money on fast food, cable tv, big screen tv, magazines, newspapers, and all the other crap people waste money on. I also managed my diet extemely well, and saved lots of money cause I don't use alcohol, cigarettes, fast food, and other junk. You would be AMAZED at how much you can save just by not buying things you dont really need. Anyway, I got a credit card for $5000 at 8.9 percent interest, fixed, at the time of my first loan by simply putting my savings in a credit union account.

People are broke. It's a fact of the times. The banks and credit unions, shop around, will work with you. Just try to establish a mutual relationship with them.

FINALLY, DONT GET "HOSED" ON INTEREST RATES FOR LOANS JUST BECAUSE YOU WENT BROKE. If one credit union won't deal with you, then someone else will. SOMEONE WANTS YOUR MONEY. They will deal with you. Just make your payments, pay off loans well ahead of time, and keep saving money each month. HOWEVER, DONT TAKE A TEN PERCENT LOAN UNLESS ITS YOUR FIRST ONE, AND YOU PAY OFF THE LOAN AFTER NINE MONTHS.

YOU CAN DO IT. JUST DONT START BUYING JUNK ALL THE TIME. YOU DONT NEED IT. FINALLY, THE FASTEST WAY TO GET MONEY IS TO SAVE IT. SAVE SOME EACH MONTH--LIKE $50, OR MORE. JUST KEEP PUTTING SOME IN YOUR SAVINGS AND PAYING YOUR LOAN PAYMENT.

WITHIN A YEAR, THE CREDIT UNION WILL BE GIVING YOU ANY LOAN YOU WANT, WITHIN REASON.

Thank you omaha44. I am going through a divorce and a foreclosure. In a nutshell A NIGHTMARE! I am trying to look for a place to live, and with a 518 credit score its not happening. I did find a For Sale By Owner/ To Rent (same property). Called the owners, was upfront with them. I have the first month's rent and security deposit. I was hoping for a rent-to-own, however, they just want it either sold asap, or rented asap. I am willing to rent and gain someone's trust back by making rental payments on time for the one year lease. I would love to own it. Any suggestions regarding this? I definitely agree that paying off small loans on time is the way to go. I too have scaled back, no cable, no eating out, I even have been cutting my own hair, etc... It has been hard, but I just want someone to give me a chance since I was dilusional about someone else paying the mortgage on time etc. I need to take responsibility for what gets paid on time now, and I'm doing it, its just a slow process. Thanks for any feedback you can give me. Good Luck omaha44!

Thank ypu for a very reasonable and understandable explanation. I have struggled for years to rebuild credit. I am also disabled and am trying to rebuild my life. I admire your determination and positive attitude. Thank you for sharing your story. My problem is a spouse that thinks that if he has money in his account he can shop or go do something, I am a homebody. My outings are doctor appointments and grocery shopping. I try to coupon as much as I can to save money there. I just had to get dentures because my health issues caused tooth loss and I could not get credit to do so. So my 72 year old mom co-signed my application for CareCredit Which is a part of a larger credit co (the name escapes me at the moment). But by doing so I can establish credit in my own name and will work to build good credit.

Finally someone spoke the bitter truth. Well said Mr. Omaha44. You need to be consistent in not spending on things that you can live without when the times are tough.

Say after 6 months you would have made it a habit of spending only on things you need. That money you saved, can be used for may be starting a business, or saving for an emergency fund or just feel good that you have a better bank balance.

My salary is decent but it wasnt enough to make it through the month for me and my family. Car loan, rent, insurance and student loans..Surprisingly most unnecessary expenditure came from not the big items but the small ones which I never realized.

Like buying coffee on my way to work..~$2.3 x 22 = ~60

extra phn features ~40

Extra car - rid off..

no unnecessary groceries ~ $100(s)

Love cocacola ~ 10

Misc unforseen unnecessary expenses ~100(s)

In the end I want to change my job for a better pay..there are offers but for a final interview i need to do a face to face interview..but this saved money is helping me fly in for that change..

This little tip may change my family's future..Good luck to you all !!

IF YOU THINK PAYING YOUR BILLS OM TIME FOR 10 YEARS WILL GIVE YOU A GOOD CREDIT SCORE THEN YOU ARE MISTAKEN. THE ONLY THING I HAVE SEEN THAT IS IMPROVES SCORE IS LONG TERM PAYMENTS AND NOT USING CREDIT CARDS AT ALL.

All I heard in the first part of that was work hard (or not work in your case) and don't enjoy your money. There is no joy in a hard days work without the "crap" as you put it. I work hard and I pay utility companies I don't have a choice on pay gas rates I don't have a choice on, live in a good neighborhood so my children go to a good school and pay taxes I don't have a choice on. Those things you call "crap" are the choices. A sunny day at the park with my kids is free but I enjoy watching my big old tv and digital cable at the end of a long day. The answer isn't to tell people don't enjoy the pleasures out the there, it's not "junk" the answer is to tell people to be patient and make smart decisions with the money they have. Saving is smart, investing is smarter but simply don't live beyond your means and enjoy your money, because you can't take it with you when you die.

all of my scores are excelant except Vantage which is a B. I have never paid late and I recently paid off my mortgage so that I have no debts other than credit cards which I pay in full, even before the due date. Credit scores are a farce when 60 years of paying perfectly rate a B

The whole Credit Score Oppression is created by banks and Credit Card companies. My Vantage Score just dropped 25 pts for no reason I can see. Unless reducing my debt down to 20% from a high of 53% is a negative??? And guess what it is a negative. My husband had a score of 786 until he paid off his debt. Now his score has dropped 20 points and he has a B now instead of an A. All because he has no credit card debt. It's stupid

I had a score of 805 and had credit card companies reducing my credit limits like crazy before the new laws went into effect 2 years ago, thereby making my utilization of credit sky high based on my new lower lines of credit. It's a game and I no longer want to play as the rules keep changing.

I pay cash for everything and only use a AMEX card that I pay in full every month. SCREW the BIG 3, I don't care about my score and the rest of you should do the same. It's a hostage situation with this crap.

I find it disturbing that responsible people like me are encouraged to alter their behavior in order to improve their credit scores.

I have 0 debt; pay my credit card balance monthly without fail; pay every bill on time; car is paid-off; student loans are paid off. Also, my credit card has a $20K limit, so I certainly do not need another. I have budget and I stick to it. Finally, I have built up a very big savings.

All of this leaves me rather annoyed to get a "B" Vantagescore. I will be ****ed if I will seek more credit accounts that I do not need just to pump-up this bogus credit score.

If you are going to apply for that in a few years, get 2 more cards now and by then your score will be great. Don't get any cards with annual fees, get the ones that have the biggest rewards and initial bonuses. I don't carry balances from month to month, but I certainly take advantage of the best rewards on each card. That is a benefit! Get cards that have 3%, 4%, 5% or more on certain categories and use them on those categories. It is only smart to take advantage of it. I got a card in January that has already given me $300 in rewards!

If you have a B score you qualify for most no annual fee credit cards, and most of those start with a 12 to 18 month 0% introductory APR period (no interest). One of the main reasons you are only a B is because you don't have enough open accounts based on what you said. I would recommend applying for several of these cards in order to build up the ammount of accounts you have. Go for the cash back cards like Chase Freedom and Capital One Quicksilver and you'll even get a free 100 bucks if you spend a certain amount in the first few months. I do this and just use the card for gas and/or groceries for the first several months and then pay the bill with the money that I would have used for the same thing out of my paycheck (again, these are 0% introductory period cards, so I'm not paying any extra interest doing this). I make sure I spend enough to grab the introductory cash offer and then dial it back. At that stage I usually keep the balance under a couple hundred bucks a month and then pay off in full or close to it with each monthly payment. Doing this ensures that I stay at 20% or below of my credit utilization ratio, which puts me in the excellent range. Finally, once the 0% APR period runs out and you do have to start paying interest, only buy one or two small things a month on that card and pay your bill in full each month. A lot of card companies will mark the card as incactive and stop reporting to the bureaus if you don't use them for a certain period of time, so it behooves you to at least make one or two small purchases each month once the 0% APR period runs out. If you do this you will bump that score up to an A well before you need to apply for that bank loan. The credit game is annoying, but it's not going away and it can work in your favor if you're smart about it.

@MsL62 I know! I'm in the same boat as you. It's Bull___! They just want us to open more cards to get an "excellent", A Vantage score. My regular score has already plateaued. My credit score has been 768 for the past 7 months. I'm not sure how I lost 9pts in my Vantage score last month- maybe becuase I used my credit card a little less? So stupid.

I saw my FICO score jump from 748 to a 765. meanwhile my vantage score has dropped 53 points in the last two months . I paid off a car loan two months ago and paid it off two years early. This month I charged a set of tires and had the front end aligned at the cost of $721.00 and paid off 200.00 before I even received a bill and I have six months to pay them off interest free from my firestone card. I don't have any Idea why the vantage score dropped as my FICO score has risen and all my other credit cards are paid off each month.It looks like somebody else is driving the vantage scoring now.

The only reason the big 3 created the Vantage score was because they didn't want to pay for the FICO license anymore. What they consider a "better" gauge of people's credit was a way for them to save money.

This whole thing has to stop. People should have one score and that's it. There are already 4 different scores - FICO, Vantage, homeowners insurance, and car insurance. Pretty soon, we will have 15 different scores, or something that ridiculous, on us.

The industry doesn't give a crap about people - what else is new. People who are trying to rebuild their credit are immediately put out of the running for anything decent with the Vantage score. I have a good credit score but Vantage puts me down to a bad credit score.

One interesting thing about the Vantage score is that more banks are using it for their credit card decisions. This means that it is becoming easier for those of us who monitor our scores and use the advice can max our scores faster and get what we have built up to. I am certain that one of the reasons that I have 2 of my better cards is because they used the Vantage not the FICO.